There Are Too Many Red Flags for Astra Space at the Moment

There’s reason to believe investing in Astra Space (NASDAQ:ASTR) stock is unwise right now. Although its share price is at an all-time low, I don’t think there’s much reason to call it a buy-the-dip opportunity.

Person holding mobile phone with logo of American aerospace company Astra Space Inc. (ASTR) on screen in front of web page.
Source: T. Schneider / Shutterstock.com

Broader structural implications in the markets preclude that from being the case. That’s a good place to start when discussing the space launch company. Because while it’s interesting and would garner lots of attention on the basis of its business, the timing is a bit off.

ASTR Stock and Changing Monetary Policy

Recent news that treasury yields are rising bodes negatively for stocks of all stripes, particularly tech stocks and growth stocks. The overarching signal is a more hawkish Federal Reserve stance, and that has sent growth stocks moving downward.

In my estimation that structural market issue makes Astra Space one to avoid at the moment. In other words, it is hard to see why the market ought to be very optimistic about ASTR stock right now.

Yes, it is a rocket launch company. That broadly puts it in a category that includes other names like Virgin Galactic (NYSE:SPCE), Blue Origin, and SpaceX.

When Fed money policy is looser, growth stocks like Astra Space fare much better. But that isn’t the case with the Fed’s latest signal. While rocket companies are intriguing in a general sense, the market structure doesn’t favor them or other growth stocks currently.

And with inflation running high, it’s impossible to predict when monetary policy will ease. It could be a long time before growth stocks find favorable market conditions again. That means if you buy ASTR stock on the notion that it’ll pop upward soon, you’ll likely be sorely mistaken.

That being the case, let’s simply take a look at Astra Space in more depth as a company of interest.

A Practical Business Model

Astra launches payloads under 500 kilograms (1102 pounds) as far as 500 kilometers (310 miles) into orbit. That’s vastly different from what Virgin Galactic does in attempting to commercialize space flight. Blue Origin is focused on commercial space flight as well. While Elon Musk seems to have his eyes on making life multiplanetary through SpaceX.

Astra, on the other hand, seems to have a more modest, if achievable goal than the others. Orbital payload launches from Kodiak, Alaska and Cape Canaveral, Florida.

From that perspective Astra seems far more pragmatic than, say, humans traveling afield and populating Mars in the near future. I certainly know which business model I would expect to lead to substantive revenues first.

But the other point is that Astra is a growth company underpinned by more hype than substance at this point. It has made some headway, but its financials aren’t attractive.

Astra’s Progress

Back in November Astra Space met a developmental milestone. It successfully placed a test payload 500 km (310 miles) into orbit. A tremendous accomplishment to be sure.

But as great as that is, it doesn’t matter right now. The market will be looking for strong fundamentals including revenues. Astra hasn’t made any commercial headway. It launched a test payload, but it isn’t launching payloads into orbit for others. That’s where it wants to be.

But the latest earnings report shows that Astra will have a lengthy runway to profitability. It lost $206.517 million through the first nine months of 2021. That might not necessarily be an issue for a space company when monetary policy is loose. But again, that isn’t the case currently.

What to Do with ASTR Stock

Negativity aside: keep an eye on Astra Space.

It still has ambitious plans and its road to success or failure is far from being written now. It has launches planned soon. Its success or failure hinges on deriving revenue from those launches at a later point.

Don’t buy ASTR stock now, but keep it in mind for a later date.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.


Article printed from InvestorPlace Media, https://investorplace.com/2022/02/astr-stock-has-too-many-red-flags-at-the-moment/.

©2022 InvestorPlace Media, LLC